Good-bye to privacy?

The first trend is advertisers' combining online and offline data to build digital dossiers of Web surfers. Companies such as BlueKai, DataLogic, and Nielson are working with online advertisers to help them reach Internet users with ads based on their offline behaviors and demographic attributes. Advertisers are careful to note that only nonpersonally identifiable information is used and that people are never identified by name, but rather as demographic subgroups. Want to show a banner ad to, say, a conservative Caucasian mom with three kids, age 34, with a household income of $120,000, who works out four times a week at the gym? No problem.

Connections between the offline and online worlds are often made via an e-mail address kept on record by a company that you do business with. That e-mail address could create a link to a composite profile made up of your online activities from sites such as social networks. By cross-referencing that e-mail address, advertisers can show you banner ads tailored to your spending habits and to your political views expressed on Twitter.

Real-Time Shark Bait

The second trend is a real-time ad-bidding technology that lets advertisers, such as Google and Yahoo, track users online and deliver customized third-party ads--all in the blink of an eye.

Here is how it works. As you go from site to site, advertisers can bid in real time to show you an ad tied to your online activity. For example, if you are shopping for a Nikon digital SLR camera, you may see an ad for a competing Canon DSLR model on the next site you visit. If you buy that Canon, advertisers can then bid--in a fraction of second--for the right to show you, on the next site you jump to, ads for lenses for that camera.

Advertisers can track you from site to site only if the same advertising company delivers ads to those sites. For instance, Google-owned DoubleClick delivers ads to thousands of the Web's top destinations. Its real-time ad-bidding program is called DoubleClick Ad Exchange.

Privacy Double Whammy

The rise of those two online marketing trends that create cunningly effective advertising campaigns--tailored in just a fraction of a second to a Web surfer's household income, interests, and online activity--may not be a real surprise. But privacy activists say that they go too far and that advertisers are unfairly tracking people and profiting from their data.

"Consumers will be most shocked to learn that companies are instantaneously combining the details of their online lives with information from previously unconnected offline databases without their knowledge, let alone consent," says Ed Mierzwinski of the Public Interest Research Group, a government watchdog organization.

The Center for Digital Democracy's Jeffrey Chester says that this type of advertising fosters predatory ads. Examples could be dubious health cures or high-interest loans for HDTVs.

Advertisers have been sensitive to privacy concerns, according to the Ponemon Institute, a privacy research group. Ponemon says such concerns have prompted online advertisers to use behavioral ads 75 percent less than they would otherwise.

Transparency is key for advertisers, says Scott Meyer, chief executive of Better Advertising. He says the industry has stepped up efforts to ward off government regulation by developing self-regulatory programs. One is the use of transparency icons: Click on such an icon in an ad, and it tells you that the targeted ad is using demographics and behavioral data.

Better Advertising offers a browser plug-in called Ghostery that can alert you to hidden trackers and block scripts from tracking you. Chrome, Firefox, and Internet Explorer support the add-on; but, except in Chrome, the blocking functions don't work.

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